When the end is near, there's no place like home

For many people the thought of dying in a nursing home is worse than death itself. Those I've spoken to -- particularly the ones reaching their 80s or 90s, when they have to consider the inevitable -- want to die in their own home, in familiar surroundings. My mother wanted nothing more than to remain in her home in her later years. And she did.

I can't blame them. I recently watched someone -- a World War II veteran -- die in a nursing home. Although he received decent care, and the nurses were kind to both him and his visitors, noisy and constant interruptions, people screaming for the nurse when they didn't even know what they wanted, televisions blaring and the smell of disinfectant permeated the air.

"No matter how they disguise it, it's an institution," says Richard Gelula, executive director of TheConsumerVoice.org, which advocates for the elderly. "They operate for themselves -- and you're on their schedule."

Overstaying your welcome

The insurance industry -- until recently -- embraced the concept of long-term care insurance (LTCi), which was sold as a way to pay for nursing home care. This product sold well in past years, due in part to the fact that older people realized how fast a stay in a nursing home could drain their assets. One New Jersey facility that I visited cost $700 a day -- and that was several years ago.

But recently LTCi has run into trouble on several fronts. Medical care has become so good that patients stay in nursing facilities longer. "People don't die, they just become more frail," says Gelula.

There's been rampant inflation in medical costs. And low interest rates have cut into the investments insurers set aside to pay for the LTCi policies sold many years ago, when rates were much higher.

As a result, long-term care insurers either left the business or raised their rates to the point where the elderly couldn't afford it. The remaining insurers gave policyholders a choice: drop coverage and lose everything invested; settle for less coverage, such as waiting longer for your LTCi to kick in, or have a time limit imposed on your stay.

And that ruined the industry's reputation.

Alternative care

So insurers began to explore other options, often variations on a traditional life insurance policy. New York Life now offer policies such as the Asset Preserver, a single premium policy that accelerates the tax benefit, tax-free, to help pay for long-term care services, which could include nursing home, assisted living or extended at-home care.

Other insurers go even further. Prudential is rolling out an optional rider that lets consumers use the death benefit to cover almost any costs associated with chronic or terminal illness.

What makes this good for people who want to stay in their own home is that once a policyholder qualifies, "accelerated" death benefits can be used to pay for things like a homemaker, a wheelchair access ramp, mortgage payments or even cab rides to the doctor -- all services that an elderly person requires to stay put.

But there's a cost associated with this rider in addition to the cost of the actual policy. Steve Roche, vice president of Prudential's Individual Life Insurance Business, says the rider typically adds 10 to 15 percent to the cost of the premium. However, there are tax benefits to life insurance, too, he points out. "You get leverage on your premium dollar," says Roche.

Prudential isn't the only company to offer options of this kind. "This has grown into a more mature market over the last five years," Roche says. "But the ability to use the money for anything is less common."

The no-nursing-home option

For an aging American public, this is clearly an idea whose time has come. Our nursing home population has declined from a high of about 2 million to its current 1.35 million. And there's also been a decline in the number of nursing homes, according to the Centers for Medicare and Medicaid Services, although the current ones are bigger.

"Most care will be provided by families," says Dr. Robert Pokorski, medical director for Prudential Individual Life Insurance. "Baby boomers are taking better care of their elders."

My neighbor is a good example of the direction in which elderly health care is headed. Having just turned 98, and in surprisingly good shape, she gets up every morning and dresses up, cooks for herself and her care worker, plays the organ, and stays in touch with all her friends and everyone in our neighborhood. And she's a source of support for a lot of younger people.

When her house was broken into a few years ago she was on the verge of going to a nursing home. But she opted instead to hire a reliable care worker and install the loudest burglar alarm you ever heard. So she still lives in the two story Dutch colonial where she was born, raised, married and has spent her whole life. She also happens to be typical of several other people who live on my block.

I compare this to the veteran that I visited at the nursing home. "I just want to go home," he kept saying.